In a Bill, Wall Street Shows Its Clout
By Andrew Ross Sorkin
Wall Street often tries to play down its influence in Washington. As Congress pushed through financial regulations that seemed to get watered down last year, Wall Street’s chief executives tried to suggest, somewhat surprisingly, that their highly paid lobbyists did not have much sway.
If there is still any question about how much power Wall Street actually has in Washington, here is some fresh evidence worth examining.
In a piece of legislation recently passed by the House and the Senate to revamp patent law, a tiny provision was inserted at the last minute called Section 18.
The provision, which my colleague Edward Wyatt detailed in an article ahead of the House’s vote on the bill last month, has only one purpose: to allow the banking industry to skirt paying for certain important patents involving “business methods.”
The provision even allows “retroactive reviews of approved business method patents, allowing the financial services industry to challenge patents that have already been found valid both at the U.S. Patent and Trade Office and in Federal Court,” according to Representative Aaron Schock, an Illinois Republican who tried to strike the provision.
The legislation was initially introduced by Senator Charles E. Schumer, a New York Democrat, with an even narrower view: to protect the interests of his big bank constituents in a dispute with DataTreasury Corporation of Plano, Tex., a company that owns dozens of patents for processing digital copies of checks.
Wall Street fought for the bill because it says it has been held hostage by holders of “business method” patents that should never have been granted by the patent office in the first place. Banks like JPMorgan Chase have been fighting DataTreasury over its patents for years.
The language in the bill is expansive. It covers patents for “a financial product or service” as well as “corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.”
But since the bill and Section 18 were passed and word has spread about it, dozens of other companies are starting to worry that the breadth of the provision may affect them too. And they are fighting back, hoping that the Senate — which still has to reconcile the House’s bill with its own — tosses the provision out.
“It would be a tragedy if the greed of the big banks and their willing accomplices in Congress use this important legislation to trample the rights of legitimate patent holders and in the process weaken the integrity of our patent system,” Tom Giovanetti, the president of the Institute for Policy Innovation, a conservative research group, said in a statement.
Steven F. Borsand, executive vice president for intellectual property at Trading Technologies International, which develops high-performance trading software for derivatives professionals, is worried that Section 18 will allow many of his banking clients to simply copy his company’s software.
“This isn’t just about DataTreasury,” he said. “Section 18 will affect many companies, including ours.” He expects that his company will be forced to “spend more time and money defending” its patents, he said in a statement, adding, “Only lawyers stand to benefit from this.”
Other companies, including high-tech firms like VeriFone and Square, the mobile phone payment start-up, could be affected by the law, putting their patents in jeopardy. Cantor Fitzgerald, known for its computer-based bond brokerage, has a number of valuable patents that could similarly fall under the legislation.
Of course, in the grand scheme of things, a new patent law may seem to be unimportant or to affect only a few inventors.
But Section 18 represents a much larger issue: It is perhaps the most blatant demonstration of the lobbying power of Wall Street and, just as important, the willingness of Congress to support the interests of the banks, even in the face of clear evidence that the law has no purpose other than to benefit the financial services industry.
When anyone suggests that Wall Street owns Congress — whether true or not — Section 18 will be Example A of a pork-barrel project for Wall Street. For lack of a better cliché, it might even be considered another backdoor bailout of the banks.
The banks “are attempting to write into law what they have been unable to achieve in litigation,” Representative Maxine Waters, Democrat of California, wrote in a letter to colleagues..................... read more
not a snowball's chance in hell do we have while the D's & R's of our dysfunctional gov't are owned by the banks and corps., writing laws for their benefit, doing their bidding